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Thursday, March 22, 2012

Greeks solving their own problems

This very interesting Ekathimerini commentary by Alexander Papachelas focuses on one of the points which this blog has made from the beginning, namely: others can and should help, but in the final analysis it is the Greeks themselves who are the only ones who can solve their problems. Mr. Papachelas summarizes it as follows:

At the end of the day, they say Greece will only come out of the crisis when it manages to solve its political problems. That is, when we finally take matters into our own hands, when we finally pick responsible and honest people for the crucial posts, and when our politicians finally convince us that they have a plan and vision instead of invoking the troika bogeyman.

1 comment:

When I read the Papachelas' commentary, I thought "this is very reasonable", but then I saw he's an adviser to Papademos. Being cynic I couldn't help thinking he was looking as much to his friend’s legacy as to the future of his own country.

There's little now that can be said about Greece until the results of upcoming election are known (assuming it happens). My prediction is that the result will be an ND/PASOK Coalition; which means Greece will presumably retain a watered down version of its 'look after yourself and your mates' culture.

Greece's longevity in the EuroClub may well be decided in Vienna rather than Athens, Frankfurt, Washington or Brussels. If Strache gains a strong position in next year’s election, then Austria could exit the Euro, and who knows who might follow. If it resulted in a substantially weaker Euro then Greece could probably remain within it, otherwise it probably won't. Given the 'success' of the PSI restructure, perhaps Greece + Troika could finesse an orderly change to a different currency. Some of those who predicted the PSI restructuring would be a disaster are now making similar predictions if Greece should leave the Euro; why should I believe them (n.b. I don’t include KK as one of the some).

I've previously advocated for a Northern Euro. But I've changed my mind in the light my better understanding of the flaws within the Euro's design. A Northern Euro with a single central bank, a single treasury and a unified tax & welfare regime has little chance of gaining the support of the citizens in the AAA nation states. They want a return of sovereignty, not further dilution. A northern Euro based on the design of the existing Euro would just be more kicking the can; so I now think those countries should revert to sovereign currencies.

France might do a better job of 'running' the Euro than the ‘Germanic’ states. It established two Monetary Union's in its former Central and West African colonies in the 1960’s; they appear to have functioned without significant drama in the ensuing 50+ years. The two central banks have since merged some of their operations; and the two equivalent currencies are pegged to Euro.

Anglophone Gambia, Ghana, Liberia, Nigeria, and Sierra Leone along with Guinea, have formed the West African Monetary Zone (WAMZ) which appears to be modelled on the Francophone monetary unions. It aims to introduce a common currency, the Eco, on 1 January 2015; and its ultimate goal is to unite with the existing Francophone West African monetary zone.